Keys to Recovery

Conservative -- truly conservative, not pseudo- or nouveau conservative -- philosophies seem to be the key to the post-recession economic success of metropolitan centers in various parts of the world cited in a Brookings Institution survey, "Global MetroMonitor: The Path to Economic Recovery." Alan Berube, who reported on the survey, discussed it earlier this week on one of my favorite radio programs, "Conversations with Kathleen Dunn" on Wisconsin Public Radio.

Surprisingly, the metropolitan area that topped the list as having the best economy based on employment and production output per capita in the first year after the Great Recession was -- (drum roll) -- Istanbul, Turkey. The best the U.S. did was Austin, TX, which placed 26 (out of a total 150 metropolitan centers worldwide). Next best U.S. metro area was Virginia Beach VA at 36. The criteria were employmennt rates and output per capita.

So, why Istanbul? Two factors, according to Berube.

One is that Istanbul experienced no real estate bubbl. In other words, unlike a number of metro centers such as Las Vegas NV and Dublin, Ireland, that went through huge pre-recession housing booms, Istanbul took a conservative approach during economic good times and didn't overbuild. Both Las Vegas and Dublin were among the top economically successful metro centers pre-recession, and both were on the bottom post-recession.

The other is that its banks also took a conservative approach in their operations. They didn't engage in exotic "investiment instruments" such as credit-default swaps and other complex derivatives. As a result, when the financial world began to teeter on the brink of collapse banks in other parts of the world that did trade in such risky behavior parked a large amount of their assets in the safe havens of Istanbul banks, which enriched the Istanbul metro region.

Other metropolitan areas that ranked well in the first post-recession year are in Asia and Latin America. Lima, Peru; Rio de Janiero, Brazil, and Singapore, for instance.

Some common denominators among the successful metropolitan centers include low tolerance for corruption, not engaging in war and having a strong manufacturing base.

All three reflect conservative values, i.e.

(1) not liberally engaging in or condoning corruption;
(2) being very conservative about attacking and/or declaring war on another country;
(3) hanging onto and being very reluctant to and frugal about outsourcing jobs -- especially manufacturing jobs -- to other countires.

Berube quoted a Brazilian official he talked to about the Brookings report as saying, "We would rather go to our beautiful sun-drenched beaches than go to war."

One of the top metro centers, Shenzhen, China, Berube mentioned was a little fishing village of 25,000 in 1980 and is now a major manufacturing center and container-ship port of 10 million people. Manufacturing, according to Berube, isn't the end all for places like Shenzhen, but a foundation that is the basis for growth into modern technological industry such as telecommuncations.

In contrast, places such as Las Vegas that are consumption dependent with the majority of jobs in the service, hospitality and housing development wound up in the bottom of the rankings.

I'm on Twitter @jerrianneh